The Asian Development Bank (ADB) has greenlit a substantial $250 million policy-based loan to bolster India’s power sector reforms and accelerate the shift towards renewable energy sources. This financial injection is designed to aid India in meeting its climate change mitigation objectives while eliminating barriers to expanding clean energy financing.
Under the Power Sector Reform Programme (sub-programme 1), the first phase of a two-part initiative, India is focusing on creating robust power trade markets and ancillary services to accommodate its ambitious target of achieving 50% non-fossil fuel-based power generation capacity by 2030. These policy measures aim to encourage clean energy adoption in agriculture, expedite the adoption of solar and other clean technologies, and optimize power plant dispatch for reduced emissions.
Furthermore, the loan will support efforts to improve the financial viability, corporate governance, and service standards of power distribution companies (discoms), thus creating a conducive environment for private sector investments. A results-oriented, incentive-based strategy will be implemented to enhance discoms’ performance in areas like reducing losses, recovering costs, ensuring accurate metering, and prompt payment of dues, all of which are critical for government budget support.
This initiative expands ADB‘s involvement in innovative areas such as green hydrogen, a pivotal element in the transition to more sustainable energy sources. ADB will fund capacity-building and policy reforms with grants totaling $1.5 million from the Climate Change Fund and its Technical Assistance Special Fund. The project has been developed in collaboration with various development partners, including Germany’s KfW through its development cooperation efforts.
